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Home My WebLink About08/16/1994, C-12 - ACCOUNTING FOR COMPLETED CIP PROJECTS MEETING DATE: °1"��►��►II��P° 9111 city of san Luis oBispo g,-16 - 9 COUNCIL AGENDA REPORT ""NUMBER: J�� FROM: Bill Statler, Director of Finance SUBJECT: ACCOUNTING FOR COMPLETED CIP PROJECTS CAO RECOMMENDATION Adopt a resolution establishing procedures for accounting for completed capital improvement plan(CEP)projects. DISCUSSION As set forth in the 1993-95 Financial Plan, the Council has adopted comprehensive policies for preparing, reviewing and approving CEP project requests. The Financial Plan also establishes policies for funding CEP projects and managing them after Council approval. As a project proceeds, there are a number of systems in place for monitoring its status, including on-line financial reports, formal monthly and quarterly financial reports, formal CEP status reports, ongoing CIP coordinating committee review, and comprehensive procedures for awarding contacts and approving construction change orders. The purpose of the proposed procedures -which will be incorporated into the City's financial management manual (Section 565) - is to bring closure to the CIP funding process by establishing procedures for accounting for completed projects. These procedures will assist in accomplishing the following goals: ■ Providing consistency in accounting for completed CEP projects. ■ Improving financial reporting on the status of CIP projects and related effects on the City's financial condition. ■ Assuring timely and consistent filing of notice of completion for construction projects. ■ Identifying responsibility for approving the use of budget balances from completed projects. The primary tool set forth in the procedures in accomplishing these goals is the requirement for managing departments to prepare a written report upon completion of each project summarizing its final status. In addition to outlining the areas to be addressed in these reports, the proposed procedures include a sample report. The proposed procedures also identify organizational roles and responsibilities in preparing, reviewing and approving these reports. CONCURRENCES The CEP Coordinating Committee has reviewed these proposed procedures and concurs with them. FISCAL IMPACT There is no direct fiscal impact associated with establishing these procedures; however, they will result in improved financial management of the City's capital improvement plan. ATTACHMENT Resolution establishing procedures for accounting for completed capital improvement plan projects. FM"CCrcca.CAR ��[ RESOLUTION NO. (1994 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO ESTABLISHING PROCEDURES FOR ACCOUNTING FOR COMPLETED CAPITAL IMPROVEMENT PLAN PROJECTS WHEREAS, the Council has adopted comprehensive policies for preparing, reviewing, and approving capital improvement plan project (CIP) requests and has implemented systems for monitoring their status; and WHEREAS, the Council desires to bring closure to the CIP funding process by establishing procedures for accounting for completed projects; NOW THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that the procedures for accounting for completed CIP projects provided in Exhibit 1 and attached hereto are hereby adopted. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of , 1994. ATTEST: Diane Gladwell, City Clerk Mayor Peg Pinard APPROVED: PWG-)6r Attorney Section 565 Exhibit.1 ACCOUNTING FOR COMPLETED CIP PROJECTS OVERVIEW Under the City's capital improvement plan (CIP) budget policies, funding is designated for each CIP project when the Financial Plan is adopted. Council approval of annual CIP appropriations does not automatically authorize funding for specific project phases (study, design, acquisition or construction); this authorization generally occurs only after the preceding project phase has been completed and the costs for succeeding phases have been more fully developed. Accordingly, project appropriations are generally made on "phase by phase" basis at the time of bid award based on contract costs plus a reasonable contingency for change orders and unforeseen circumstances. Unless appropriations are subsequently made to specific project accounts under this system, funding designations lapse after three years. As the project proceeds, there are a number of systems for monitoring its status, including on- line financial reports, formal monthly and quarterly financial reports, formal CIP status reports, ongoing CIP Coordinating Committee review, and comprehensive procedures for approving construction change orders as set forth in Section 225 of this manual. The purpose of this section is to bring closure to the CIP project funding process by establishing procedures for accounting for completed projects. Where appropriate, these procedures also apply to Equipment Replacement Fund (ERF) projects. GOALS ■ Provide consistency in accounting for completed CIP projects. ■ Improve financial reporting on the status of CIP projects and related effects on the City's fiscal condition. ■ Assure timely and consistent filing of notices of completion for construction projects. ■ Identify responsibility for approving the use of budget balances from completed projects. PROCEDURES Repord ng on Completed Projects Upon completion of each project, the managing department is responsible for preparing a CAO Report summarizing its final status. Generally, reports are only required upon the completion of the construction phase, and should encompass all phases of the project. However, if the project is not expected to go beyond either the study, design, or acquisition phase, the report should be prepared upon completion of the furthest phase. Reports should: ■ Briefly summarize the purpose of project. 565-1 C-42-63 ■ Discuss any unusual circumstances or difficulties in completing the project, and recommend corrective action for the future if appropriate. ■ Compare estimated and actual completion dates. ■ Compare the project budget with actual costs. This comparison should provide sufficient detail to meaningfully summarize key expenditure areas and project phases. ■ Summarize the status of any outside funding sources such as grants, loans, donations, or developer agreements. ■ Identify any outstanding encumbrance balances that should be closed once final contract payments are made. ■ Transmit the notice of completion for filing by the City Clerk for construction projects. ■ Include a budget amendment request transferring any remaining budget balances to or from the "completed projects account". This account is established in each fund in order to account for net budget balances resulting from completed projects. This balance is available to fund new projects or offset shortfalls in existing projects, subject to Council or CAO approval as discussed below. Roles and Responsibilities ■ City CounciL Approval by the Council is required for all transfers from the completed projects account for any new projects as well as for any existing project when the transfer amount exceeds the CAD's purchasing authority. ■ City Administrative Officer. The CAO is authorized to make transfers to and from. the completed projects account for existing CIP or ERF projects. The CAD's authority to transfer balances from this account is limited to amounts otherwise within his or her purchasing authority. ■ City Clerk. The City Clerk's Office is responsible for ensuring that notices of completion for construction projects are appropriately filed. ■ Department of Finance. The Accounting Division of the Department of Finance is responsible for reviewing completed project reports for fiscal accuracy; processing the approved budget amendment request and ensuring that project budget balances on the next monthly financial report will be zero; reducing encumbrances as recommended by the managing department and ensuring that encumbrance balances will be zero after any final project contract payments are made; and ensuring that projects completed by the end of the fiscal year are not carried over into the next fiscal year. 565-2 -ra-� ■ CIP Coordinating Committee. Members are responsible for reviewing project completion reports and providing comments to the CAO or managing department as appropriate when unusual circumstances or difficulties were encountered in completing the project and corrective action is recommended for the future. ■ Operating Departments. Upon completion of a CIP or ERF project assigned to them, operating departments are responsible for completing timely and accurate CAO Reports ig the project's final status as discussed above and for distributing them to CIP Coordinating Committee members when unusual circumstances or difficulties were encountered in completing the project. A sample report is provided in Exhibit A. 565-3 !xhibit _ CAO REPORT August 16, 199X FROM: Sara Logan, Director of Public Works SUBJECT: PROJECT COMPLETION - LAGUNA LAKE DREDGING The purpose of the Laguna Lake dredging project was to mitigate flooding damage and improve recreational use of the lake by removing sediment that had built up over time. Prior to this project, the lake had never been dredged in its entirety, although there had been limited dredging of the Prefumo Arm area on a periodic basis. Unusual Circumstances or Difficulties The primary difficulties in completing this project-mitigating environmental concerns and identifying appropriate methods for disposing of dredged materials - were identified and resolved during the study and design phases. No significant difficulties were encountered during construction. This project was scheduled to be completed within.150 days after authorization to proceed; construction was completed within 148 days. Project Budget Summary Original Budget As Budget Amended Actual Variance Study 50,000 39,000 39,000 - Design 30,000 27,000 25,000 2,000 Construction Bid Amount 230,000 225,000 225,000 Change Orders 25,000 15,000 10,000 Other Project Costs* 5,000 5,000 3,500 1,500 Construction Management 15,000 15,000 1 12,500 1 2,500 TOTAL 330,000 336,000 320,000 16,000 • So*upom;mwmatr asdag Status of Funding Sources ■ Grant funds for this project were awarded in the amount of$125,000 (500/o of construction costs). Because construction costs were less than budgeted by $10,000 ($240,000), $120,000 is the total grant eligible amount. To date, $100,000 has been requested, and of this amount, $75,000 has been received. Upon final payment to the contractor, the remaining balance ($20,000) will be requested. No problems are anticipated in receiving the total eligible amount. ■ Zone 9 contributed a fixed amount of$50,000 for this project All funds have been billed and received. 565-4 The following is a brief overview of the final funding for this project. Original Budget As Budget Amended Actual Variance General Fund 155,000 161,000 150,000 11,000 Zone 9 50,000 50,000 50,000 - Federal Grant 125,000 125,000 120,000 5,000 TOTAL 3309000 336,000 320,000 L 16,000 Because $5,000 of the$16,000 in project savings is allocable to grant funding, only$11,000 is recommended for transfer to the completed projects account in the Capital Outlay Fund. Correspondingly, the budget estimate for grant revenue in the Capital Outlay Fund should be adjusted downward by $5,000. (See attached budget amendment request). Contract Status Original Contract Change Total Contract Amount Orders Costs* Balance Wepus Management 15,000 - 12,500 2,500 Smith Construction 225,000 15,000 240,000 - SSN Associates 27,000 25,000 2,000 ° Including final payments which will be processed within the next 30 days pending publishing the notice of completion. Combined with the attached budget amendment request, reducing the Wepus Construction Management and SSN Associates encumbrance balances as indicated above should result in"zero" balances for all phases of this project. ATTACHMENTS ■ Notice of completion ■ Budget amendment request closing project balances Feoa�saswr 565-5 Exhibit Recording Requested by and When Recorded Mail to e City Clerk City of San Luis Obispo P.O.Boz 8100 San Luis Obispo,CA 93403-8100 pace above this linero-t?grder s ser NOTICE OF COMPLETION NOTICE IS HEREBY GIVEN THAT: 1. The undersigned is owner or agent of owner of the interest or estate stated below in the property hereinafter described. 2. The FULL NAME of the OWNER is City of San Luis Obispo 3. The FULL ADDRESS of the OWNER is 990 Palm Street.San Luis Obispo,California 93401 4. The NATURE OF THE INTEREST or ESTATE of the undersigned is: In fee. S. The FULL NAMES and FULL ADDRESSES of ALL PERSONS, if any, who hold such interest or estate with the undersigned as JOINT TENANTS or as TENANTS IN COMMON are: NAMES ADDRESSES None 6. The full names and full addresses of the predecessors in interest of the undersigned if the property was transferred subsequent to the commencement of the work of improvement herein rcfcrred to: NAMES ADDRESSES None 7. A work of improvement on the property hereinafter described was COMPLETED August 1, 199X 8. The NAME OF THE ORIGINAL CONTRACTOR,if any,for such work of improvement is Smith Construction 9. The street address of said property is None 10. The property on which said work of improvement was completed is in the City of San Luis Obispo.County of San Luis Obispo State of California,and is descnbed as follows: Lacuna Lake Dreditina Specification No. 9X-123 Verification for NON-INDIVIDUAL owner. 1,the undersigned,declare under penalty of perjury under the laws of the State of California that I am the City Cleric of the aforesaid interest or estate in the property deserted in the above notice,that 1 have read the said notice,that I know and understand the contents thereof,and that the facts stated therein are true and correct. (Signature of person signing on behalf of owner.) (Date and Place) 565-6 V Exhibit Q city of san lues osispo r NUMBED BUbget amendment lzequest REOUEST"G DEPAFM%AENT FUND AMENDED FUND ND. _kE r oma. >< <.y REVENUES ACCDI,JNT DESCFaPTiON DEPT. OBJ. BUB-OB.I. CrPJT PROFOSED AMENDED BUDGET AMENDMENTS GET L 6 �' 0 3 SD ZS 0 0 oZZ TOTAL /ZSoO D ITS,—.00,0) /Z-C� O o 0 EXPENDITURES ACCOLlvT DESCF4PTiON DEPT. OBJ. SLB-05J. CURMENT PROPOSED AMENDED BUDGET AMENDMENTS BUDGET Z) s` r.4 -23D2--,7000 c S T .7sS boo tvf.c i v:.� SS s o o s -00 �..G t o0o S D SD DPOO TOTAL .�os'.3oD SoDo -MoD/Joo PURPOSE Ga r DEPAFTMENT HEAD DATE DPECrOR OF P7"NCE gICATECJTY OPF+CER paTE ENTERED BY CB"= pAy OISTRIBUTIONt WM&Fmvo C�r FVwm Pwc DOPWVMq GoWwacd 08PLMMM Fo.ooy 50-BB 565-7